I have lost count of people I know who have not consulted a tax adviser and got their tax affairs sorted out properly. Many people think that they can live in Spain and carry on just paying tax in their home country, others think that they can be self-employed in Spain and still pay income tax in their home countries!

Tax is a complicated issue and you need to take advice from a professional tax adviser before you move and after you move. There are many companies who specialise in giving tax advice to expats, so there is no excuse! You do not want a hefty bill from the Hacienda in the future.

If you live in Spain for 183 days or more per year, you are classed as a resident in Spain for tax purposes and should therefore pay tax in Spain. Even if you are self-employed and your company is registered in another country, if you work physically in Spain, on the internet etc., you are liable to pay tax on your income in Spain. This is why it is essential to get good tax advice.

Your NIE number will act as your fiscal (tax) ID number. Tax returns are completed annually, or  quarterly for self-employed people, and it is best to use an asesor fiscal (tax adviser) or contable (accountant) to help you with your tax return.

Taxes in Spain:

• Income Tax – Employees in Spain will be taxed at source, but the self-employed will have to pay income tax quarterly. If you don't reside in Spain but have income in Spain, such as rent, you will need to declare that income. Spain has a double taxation treaty with many countries so you will not be taxed twice on the same thing.
• Property Owners' Imputed Income Tax – Non-residents have to pay this tax in Spain on their holiday home or investment property. Residents do not have to pay this tax on their principle residence.
• Wealth Tax – Wealth Tax or “Patrimonio” is payable by residents and non-residents and is a tax on your assets. Seek advice from a tax adviser so that you are aware of all of the relevant deductions and exemptions.
• IBI – This annual property tax is charged by your local Town Hall on an annual basis and is calculated on the “catastral” value of your property. Residents and non-residents will have to pay this tax and you should keep hold of receipts for when you sell your house in the future.
• Capital Gains Tax – Like in most countries, this is a tax on any profit made from selling assets. Assets include businesses, stocks and shares, property and land.
• Inheritance Tax and Gift Tax – Gift tax is imposed on any assets that you receive from someone as a gift and inheritance tax is a tax imposed on assets received from an estate.

This is a brief overview of tax in Spain and is not a substitute for good advice from a professional tax adviser. Whatever your situation, you should get advice about tax in Spain – ignorance is no excuse when the Hacienda catches up with you.